Act now – Don’t get struck-off

Following recent changes to BVI legislation, companies in the British Virgin Islands risk being struck-off by the registrar for not filing particulars of their directors.

Necessary action

To prevent the risk of strike-off ensure that the details of your directors are submitted to the Registrar and any outstanding fees or penalties are paid. Going forward any subsequent changes to directors’ particulars should be reported to the Registrar on a continual basis within 30 days of any change.

Please contact your usual Harneys Corporate Services representative (the company’s registered agent) to ensure details of the directors of your company are up to date and all necessary filings have been made with the Registry.

Background

Filing a register of directors with the Registrar of Corporate Affairs is mandatory under section 118B of the BVI Business Companies Act 2004 (the BCA).

The register of directors, however, is not accessible by any person other than the Registrar, a company’s registered agent and/or any other person authorised in writing by the company, unless:

• a company makes an election for it to be public
• it is made public pursuant to a court order; or
• a competent authority acting in the exercise of its powers as a regulator of financial services business, tax administrator or law enforcement agency makes a written request to access the register

Since 1 April 2016 (for newly incorporated companies) and 31 March 2017 (for existing companies) companies are required to:

• file particulars of their directors with the Registrar within 21 days of the appointment of their first directors; and
• file any changes to the register of directors within 30 days of such change

There are, however, still a number of companies that have not yet made the required filing with the Registrar. As a result, action has been taken and the law has been changed.

Changes to the legislation

Penalties and fees

The BVI Business Companies (Amendment of Schedule 1) (No 3) Order 2018, which came into force on 1 September 2018, contains important changes to the penalties and fees for late filing of information in relation to directors.

Previously, where a company was late filing particulars of its directors it was subject to a penalty of up to US$8,000. This has now been reduced to US$5,000. A company is also now entitled to a refund in respect of the excess of any fees which it has paid for non-compliance, over the new US$5,000 cap.

Strike-off

Significantly, a striking-off process for non-compliant companies has now been implemented so that any company which has not supplied its directors’ particulars by 31 December 2018 risks being struck-off the register of companies.

Where a company has been struck-off the Register, the company, its directors, its members and any liquidator appointed in respect of the company may not (i) commence legal proceedings (ii) carry on any business (iii) defend any legal proceedings (iv) make any claim in the name of the company or (v) act in any way with respect to the affairs of the Company.

Good standing

On 1 October 2018 the BVI Business Companies (Amendment) Act 2018 came into force which amended section 235 of the BCA in relation to the conditions for ordering a certificate of good standing from the Registrar. If a company has not filed a copy of its register directors with the Registrar, the Registrar will not issue a certificate of good standing in respect of the company.

Importance of maintaining good standing

A company or a person may require a certificate of good standing for a number of reasons which include:

• conducting foreign business
• entering into banking and financing transactions
• opening bank accounts
• due diligence matters
• legal opinions
• corporate governance, and
• compliance and audit

Having the ability to readily obtain and produce a certificate of good standing is not to be underestimated as it can significantly speed up and assist with a multitude of transactions. Also, if a company fails to maintain its good standing status there is a likelihood that this will constitute an event of default under some or all of its existing contractual obligations.